You might have noticed that Huobi’s Hobie token and Crypto,com’s Kronos coin are near the top of the weekly losers list as well.
This has to do with all the questions and concerns about the crypto reserves of these exchanges for context most major exchanges promise to disclose details of their crypto balance sheets this is in part because of concerns in the crypto Community about contagion from the FTX Alameda situation and in part because the crypto Community doesn’t want another FTX Alameda situation let me just quickly say that crypto holders calling for oversight of crypto exchanges is something we predicted.
In the federal reserve’s vice chair for supervision Michael Barr Michael was the architect of the laws, put in place following the 2008 financial crisis time for part two.
Anyways the first exchange to disclose its reserves was Binance and it revealed an expectedly impressive portfolio 23 billion dollars in BUSD which is issued by Paxos a regulated Trust Company in the United States and 16 billion dollars in USDT which is issued by Tether a much less regulated company.
Binance also holds around 7 billion dollars worth of BTC, seven billion dollars worth of ETH and 6 billion dollars worth of BNB Binance’s exchange token, another 11 billion dollars is held in other cryptocurrencies.
Grand total is roughly 70 billion dollars of crypto, no information about liabilities though.
If I’m not mistaken the second exchange to reveal its reserves was Crypto,com and the contrast to finances reserves really couldn’t be more apparent: 800 million dollars in BTC, over 500 million dollars of SHIP, almost 500 million dollars in ETH and 650 million in stable coins and other cryptos.
Crypto,com’s incredibly large SHIP holdings have turned heads in the crypto community as has the exchange’s recent transfer of its ETH reserves to gate IO.
Another cryptocurrency exchange Huobi also recently transferred large amounts of ETH to binance and OKX.
This has led to speculation that the exchanges are secretly sharing cryptocurrency amongst themselves to ensure that their reserve snapshots look better than their reserves actually do.
Crypto,com and Huobi seem to be at the top of the speculation list, hence the crashes of the HT token and CRO.
If that wasn’t bad enough it looks like users of these exchanges are starting to withdraw their funds out of caution the same way they did with FTX.
If these precautionary withdrawals evolve into a bank run and the exchanges don’t have all deposits covered one for one then we could see Crypto,com and Hobie follow in FTX’s footsteps specifically insolvency.
I feel obligated to point this out because the headlines do in fact suggest that both exchanges have been hit hard by the bear market.
Crypto,com reportedly paid 700 million dollars for the naming rights to a stadium and recently cut anywhere between 25% and 40% of its workforce.
Depending on your source Huobi is in a similarly sticky situation as it was heavily affected by China’s crypto crackdown last spring was recently acquired by a VC associated with Justin’s son and is currently in the process of relocating its operations to the Caribbean.
These are just two of many reasons why I would advise keeping your crypto in your own personal wallet regardless of the crypto exchange or platform you’re using.
The harsh truth is that the FTX Alameda contagion is not over and this means the only protection is a self-custodial wallet.